Global Coal Market Faces Downturn Amidst Waning Demand and Surging Renewables

In November 2023, the international Coal market experienced a significant decrease in prices, driven by a combination of factors such as a robust supply chain, low demand, and a global shift towards renewable resources.

In the USA, the price of the product saw a substantial decline of approximately 12% during the month, largely attributed to diminished demand from downstream power generation plants. The shift towards renewable energy sources, particularly wind power, reduced Coal-fired electricity generation. Although Coal-fired power remains the second-largest source of electricity in the U.S., the continuous expansion of wind supply is poised to surpass commodity soon. The winter season further exacerbated the decline in demand as electricity needs decreased, impacting the overall performance of power plants.

The Asian product market exhibited a mixed trend during November. In China and Australia, product prices experienced a decrease, while in Indonesia and India, prices rose. In China, the price of thermal Coal initially increased but showed a decline over the entire month due to ongoing safety inspections in Coal mines, leading to production halts and a tightening of the product supply. Despite increased daily consumption by downstream power plants, the market faced pressure on prices, resulting in a stalemate situation. Chinese end-users refrained from replenishing thermal Coal cargoes, maintaining high existing product stocks.

In Indonesia, a notable surge in Coal prices occurred, which can be attributed to challenges faced by the Australian industry. Climate change protests off the east coast disrupted operations at the crucial Port of Newcastle, impacting product exports to Indonesia. Despite these challenges, demand for Coal in Indonesia remained stable, fuelled by off-season winter demand. However, the Indonesian product market's overall supply was moderate to low. The disruption in the Australian Coal industry had a twofold impact, contributing to the surge in Indonesian product prices. The climate change protest at the Port of Newcastle disrupted Coal exports to Indonesia, highlighting the vulnerability of global product supply chains. Despite the challenges faced by the Australian industry, Indonesia maintained a robust export performance in thermal Coal, surpassing million metric tons in the first eleven months of 2023. This 10% increase from the previous year defied global efforts to transition away from fossil fuels, emphasizing the persistent demand for Indonesia's thermal Coal on the global stage. The Indonesian product market's bullish trajectory suggests continued importance in the global energy landscape, even as the world seeks cleaner and more sustainable alternatives.